Financial planning tips

How to save for tomorrow when you’re not sure about today

By Kim Armstrong

Job insecurity doesn’t have to mean financial insecurity. These 5 tips will help you improve your financial health and plan for a brighter future.

Sophia Erikson is a 26-year-old who, for the past 2 years, has had to live away from her family and friends, moving from one contract job to another. She’s determined to find a full-time job working in public affairs, but the fear of not knowing what will come next has caused her stress about money and her future.

She’s not alone. The 2016 Sun Life Canadian Health Index found that one-third of Canadians are feeling insecure about their financial health, and precarious employment was one of the top 3 reasons they feel this way. Contract and temporary positions have become a big part of the evolving career landscape in Canada. It’s common to hear about people moving from contract to contract, often without a benefits package or a pension plan.

In Erikson’s case, anxiety about her contract’s undefined end date is negatively affecting her overall financial health. The unpredictable nature of her employment situation is keeping her from planning for the future and she can only focus on whether she can make ends meet if her contract ends tomorrow.

But job uncertainty doesn’t need to mean financial uncertainty. According to Sara Zollo,1 a Sun Life Financial advisor based in Richmond Hill, Ontario , here’s what you can do if you find yourself in similar circumstances:

1. Cover yourself

Typically, contract positions don’t come with a benefits package. You want to be covered if the unexpected happens. It’s as simple as finding a good individual benefits package for a monthly fee until you have a full-time position with coverage from your employer.

2. Give yourself a buffer

Having an emergency fund with enough savings to cover 3 to 6 months’ worth of your critical expenses can help ease any stress you have about paying your bills.

3. Think twice before you splurge

If you’re on a contract or in an unpredictable employment situation, it forces you to be a little more conservative with your money. Use any bonuses, tax refunds or salary increases to bump up your emergency fund and pay down debt instead of that online shopping spree.

4. Start your own retirement savings account

Right now, while you’re trying to make ends meet, saving for retirement could be the last thing on your mind. But it’s important to set a small amount aside every month, in an RRSP or TFSA, to start saving for retirement so that you don’t find yourself struggling when that time comes.

5. There’s help when you need it

You don’t have to deal with financial stress alone. An advisor can help review your finances and develop a plan that works with your current situation.

For Erikson, contract work has led to a frugal lifestyle and finding fulltime work won’t change this frame of mind. If anything, she says it’s taught her the importance of preparing for the unexpected to keep financial stress at bay.